This decrease was mainly due to an unrealised loss of $3.9 mill on the mark-to-market valuation of the company’s interest rate swap contracts related to the vessels’ financing, compared to a $4.1 mill gain in 1Q15.
AMSC’s operating revenues for 1Q16 and 1Q15 were $21.9 mill and $21.7 mill, respectively, while EBITDA was $21.2 mill and $20.9 mill, respectively.
Included in the non-current assets is an investment of 19.6% ($25 mill) in Philly Tankers. As a result of the sale to Kinder Morgan, Philly Tankers expects to distribute excess cash to shareholders, following the delivery of each vessel.
When the last of Philly Tankers’ four vessels is delivered in December, 2017, the company will start proceedings to liquidate the company in order to distribute the remaining available cash to shareholders. AMSC said that it will receive its pro-rata share of the dividends and liquidation proceeds, which will be used to pay the subordinate loan.
As of 31st March, AMSC’s interest bearing debt was $669.5 mill, net of $7.8 mill in capitalised fees, versus $670.8 mill as of 31st December, 2015. The debt relates to the bank financing of the 10 tankers amounting to $446.3 mill, a bond of $211 mill and a subordinate loan from Aker of $20 mill.
Nine of AMSC’s product tankers are on bareboat charters until December, 2019, while the other, recently converted into a shuttle tanker, is on bareboat until June, 2025.
The US Jones Act product tanker market is somewhat softer, compared with the last three years, AMSC said. The low oil price environment has contributed to a slowdown in US shale oil production, which in turn led to a reduction in the volumes of crude shipped out of Corpus Christi, the main Texas hub for shipping crude in Jones Act product tankers.
In addition, the fleet is expected to grow during the coming 18 months.
Nine out of AMSC’s 10 tankers are in the clean products trade while the remaining vessel ships crude.
To date, profits of $4 mill generated under the profit sharing agreement with OSG have been used to offset AMSC’s deficit balances with OSG.
Philly Shipyard has entered into a definitive loan agreement with Caterpillar Financial Services Corp (Cat Financial) for a $150 mill loan facility to finance the building of four product tankers for Philly Tankers.
The conclusion of the financing follows a letter of commitment signed with Cat Financial in December, 2015.
Under the agreement, the facility is subject to a maximum borrowing amount of $75 mill per vessel and secured by a first lien on the four vessels. The loans under will accrue interest at three-month LIBOR plus 3%.
“This facility is a continuation of the extensive co-operation between Philly Shipyard and Cat Financial that now includes a total of 26 vessels, including both product tankers and containerships, and will span a period of 15 years when Hull 028 is delivered in 2017,” the company said in an exchange filing.
Philly Tankers sold the contracts for the four ships to American Petroleum Tankers (APT), a subsidiary of Kinder Morgan, in August 2015 for a total of $568 mill.
Each of the four contracts will be assigned by Philly Tankers to the Kinder Morgan entity immediately before the delivery of each vessel, due between November, 2016 and November, 2017.
The four IMO Tier II 50,000 dwt product tankers are based on a Hyundai Mipo Dockyards (HMD) design. They will be built with the option to run on LNG.
Also under construction at the shipyard is one 50,000 dwt product tanker for Crowley Maritime Corp with a planned delivery during 3Q16 and two containerships for Matson Navigation.